Mortgage Payoff Calculator

Extra repayments go directly toward reducing your loan principal. Because interest is calculated on the remaining balance, a lower balance means less interest each month. This creates a compounding effect — every extra dollar you pay now saves you multiple dollars in future interest and shortens your loan term.

On a $500,000 loan at 6% over 30 years, an extra $100/month saves approximately $60,000 in interest and pays off the loan about 4 years earlier. The exact savings depend on your specific loan amount, interest rate, and remaining term.

Both help, but earlier is always better due to compounding. A lump sum early in the loan has the biggest impact. Regular extra payments are easier to budget for and build good habits. Ideally, do both — make regular extras and add lump sums whenever you can (tax refund, bonus, inheritance).

Most fixed rate loans in Australia allow extra repayments up to a limit (often $10,000-$30,000 per year) without penalty. Exceeding this cap may incur break costs. Variable rate loans typically have no limit on extra repayments. Check your loan contract or contact your lender.

Generally, paying down your mortgage gives a guaranteed, tax-free return equal to your interest rate. If your mortgage rate is 6%, extra repayments effectively earn you 6% risk-free. Compare this to your savings rate (often lower, and taxable). An offset account can give you both flexibility and interest savings.

Paying half your monthly repayment every fortnight means you make 26 half-payments (13 full payments) per year instead of 12 monthly payments. That extra payment per year can shave around 4-5 years off a 30-year loan and save tens of thousands in interest — without any extra money from your budget.